Jarden Corp: Not A Household Name -- Yet
In the 1980s, Martin E. Franklin used to be a tennis partner of Albert J. "Chainsaw Al" Dunlap, the ruthless executive who went on to gut the Sunbeam Products Inc. appliance franchise. In those days, Franklin was an ambitious but green entrepreneur, and Dunlap was working for his father's business partner, famed British corporate raider Sir James Goldsmith. Fast-forward two decades. Now Franklin, the 40-year-old CEO of publicly held Jarden Corp. (JAH ), is determined to resurrect Sunbeam -- which Dunlap had essentially run into the ground by the late 1990s. In September, Jarden paid $746 million for the company, which had reorganized as American Household Inc. after declaring bankruptcy in early 2001.
To Franklin, a driven entrepreneur who spices up his schedule with Ironman competitions, American Household offers a chance to turn an eclectic Rye (N.Y.) holding company into a top purveyor of consumer goods. Until now, Jarden's most exciting products were Bicycle playing cards, Diamond matches, and Lehigh twine. When the acquisition closes next year, Jarden will own Mr. Coffee, Coleman outdoor gear, Oster appliances, and several other brands that will triple the company's annual sales, to $2.6 billion. And Franklin will be one big step closer to his goal of doubling the value of the company over the next few years and turning Jarden into a household-products stalwart on par with, say, the Clorox Co. (CLX ) "We can build something that's lasting and substantive," Franklin asserts.
Of course, there could be hiccups along the way. Adding durable items to a company roster made up mostly of kitchen-drawer staples will present a host of challenges. Not only will Franklin have to integrate the new brands with his other businesses, but he'll have to figure out how to hype the sex appeal of appliances, which consumers replace only every few years. Meanwhile, he has to boost margins and morale at American Household, which has struggled to recover from alleged accounting fraud and traumatic blows to its operations during the Dunlap era.
OFF THE RADAR SCREEN
At least Franklin is approaching the all-important holiday selling season with a brisk wind at his back. On Oct. 29, excluding the American Household acquisition, Jarden recorded a 46% increase in third-quarter sales, to $244.6 million, while net income rose 46%, to $22.3 million. Those results were boosted by Jarden's July acquisition of the United States Playing Card Co. and its 2003 purchase of Lehigh, which makes everything from rope to window guards. "They get into things that are really off the radar screen, then add a little innovation and great management," says Banc of America Securities (BAC ) analyst Joseph Norton.
Certainly, Jarden has come a long way since 2000. That's when Franklin and partner Ian G.H. Ashken tried to launch a hostile takeover bid of what was then Alltrista Corp., an undistinguished maker of such items as Ball jars and thermoform plastics. They intended to buy it and take it private. After Franklin led a partnership that bought up 9.9% of shares, directors grudgingly gave him two seats on the board in June, 2001. The impatient Franklin rattled off a list of suggestions, including product innovations, cost controls, and acquisitions. The board liked his ideas so much that they soon let him run the whole thing, with Ashken becoming chief financial officer, provided they agreed to keep the company public. "It was apparent to me that they had the vision and energy to make this company more dynamic," says director Robert L. Wood, chairman and CEO of chemical company Crompton Corp. (CK ) Today Franklin owns about 8% of the company, which he renamed Jarden in 2002.
Given his history as a dealmaker, analysts predict Franklin would sell Jarden for the right price. Arnie Ursaner, president of CJS Securities Inc., notes: "Martin is more focused on shareholder value than practically any other CEO I know." He has already increased shareholder returns by roughly 900% since he took over the top job four years ago. Although Franklin says he isn't looking to sell, he concedes that he would make a deal if he thought that would provide the best value for stockholders, including, of course, himself.
Still, Franklin insists he's having more fun as a CEO than he ever thought possible. Unlike his father, Roland, the longtime partner to corporate raider Goldsmith, Franklin seems more bent on building businesses up than breaking them apart. As the youngest of six children in a wealthy British household, Franklin could have easily slipped into the role of idle socialite. Instead, after studying political science at the University of Pennsylvania, he went to Rothschild Inc. in New York to work on deals, including some with his father. While still in his 20s, he partnered with Ashken to buy 11 optical shops for $2.3 million. The two built the company, called Benson Eyecare Corp., into a $350 million business. In 1996, they sold off the core operations for $270 million, more than $30 million of which went into Franklin's pocket, with two spinoffs later on.
Then came Jarden, where Franklin's strategy has centered around buying top-tier niche products and injecting them with a little pizzazz. For example, the company has boosted the appeal of the humble Ball Jar with such kitschy innovations as jam-making kits for kids' parties, salsa kits for adults, and Jar Art -- containers that can be decorated in seasonal themes. "Martin is a pragmatic, results-oriented operator," says friend Chip Kaye, who is also co-president of Warburg Pincus LLC, which invested $350 million in the American Household deal.
Franklin takes pride in his somewhat obsessive approach to life. When not running the company or sniffing out deals, he often trains for one of the 10 or so triathlons that he competes in each year. He even takes a regular stab at the grueling Hawaii Ironman in Kailua Kona, which involves a 2.4-mile ocean swim, 112-mile bike race, and a 26.2-mile run. His best time: 11 hours, 45 minutes. "It's nice for my kids to see their father be so driven," says Franklin, a father of four. "I think it's inspiring for them." Franklin maintains that extreme effort -- either in sport or business -- is more of a spiritual than material pursuit. "It all comes down to keeping a balance to life," he says. As Jarden confronts a sudden tripling in size, striking that balance could be a challenge in the months to come.
By Diane Brady in New York